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Harmful coupon strategy

The Harsh Reality of Couponing as a Promotional Strategy

Posted by andrew.mockridge | 23 October

The coupon is an immodest charmer, and bit by bit it’s building an impassible wall between consumers and brands.

When hooked on discounts, consumers can’t get enough. They grow dependent on daily deals and search only in the sale section of retail stores. They begin to identify a brand wholly by the strength of their discounts, so that in the absence of “60% off!,” all loyalty wanes, quality is meaningless, and brand value becomes synonymous with a number. Enter a new, disloyal subset of consumer culture that marketers find distant and impossible to engage.

Why, then, do coupons weigh so heavily into promotional strategy? According to an Inmar report, In 2013, coupons valuing $513 billion (up 3% from 2012) were distributed across the U.S., offering consumers an average of $1,617 in discounts per year. However, the average consumer only redeemed for 1.4% of this amount, leaving huge amounts of unwanted discounts to gather dust in spam folders, to rot in garbage cans, and most harmfully, to alienate consumers from brands.

Even in popular culture, coupons steal the spotlight from the brands who distribute them. The Learning Channel’s long-running reality show, Extreme Couponing, follows the lives of retail deal hunters as they accomplish remarkable feats of money-saving. Often, the show’s heroes buy hundreds of dollars worth of groceries for a few dollars using meticulously collected coupons. Captivating millions of viewers for five seasons, the show serves as an interesting case study of consumer behavior; when presented with discounts, how often do people care about the brands that offer them? Amusing (and sometimes appalling) as the characters’ devotion to coupon clipping is, they demonstrate how discount seekers ignore the countless brands whose products they acquire for a fraction of their value. As a viewer, the only consumer brand interaction we witness or even care about, is seeing the product’s dollar value slashed to zero.

It is only by seeking a method of engaging a consumer’s emotions that brands can enhance their products’ value. By abandoning discounts and turning to experiential rewards as incentives, brands remind consumers that they care. Leveraging a free concert ticket as a gift-with-purchase, a brand can open a door into their consumer’s lifestyle where they will occupy space alongside a memory of the event. And suddenly, redemptions cease to matter so much for consumer satisfaction – the mere fact that a brand has offered something of intrinsic worth alongside its own product is enough. Not only has the brand converted a sale, it has also tapped into the consumer’s emotions and therefore achieved loyalty.

By Patrick Futrell